Taxes and Mystery Shoppers January 8, 2009

Tax season will be here soon…..this is a time of confusion for mystery shoppers, especially those new in the industry. What deductions can you take? Do you have to report all income, or only the income included in 1099’s? What are 1099’s and will I get them from every company I mystery shop for?

We know shoppers have many questions and sometimes don’t know where to start, so the Mystery Shopping Learning Center will be providing online seminars throughout January and February to educate and assist mystery shoppers.

Carolyn Eckert, a CPA, will be hosting these events. She has worked in the industry for the last five years and also presented a tax seminar at the Mystery Shopping Providers Association’s annual shopper conference in Naperville, Illinois. She took a few minutes earlier this week to answer some questions with regard to taxes and mystery shoppers in anticipation of the upcoming seminars.

Q: Carolyn, how long have you been in the mystery shopping industry?
I started out as a Mystery Shopper in 2004. I now work for Ann Michaels & Associates and have been in the industry for almost five years now.

Q: What is the one best piece of advice you can give to mystery shoppers with regard to taxes and mystery shopping?
Be sure to keep track of income and expenses throughout the year and if necessary, make estimated tax payments. If you fail to do so, you could be stuck with a large tax bills, including fines and penalties. Note: There are many good ways to keep track of your mystery shopping work. Yesterday’s post offers some good tips and advice on this subject.

Q: Is there one mistake that you think is common to mystery shoppers when it comes to filing taxes?
Many mystery shoppers incorrectly deduct mileage. According to the IRS, Independent Contractors are not entitled to deduct mileage to their first shop and from their last shop to home, as this would be the same as deducting mileage to and from a “regular” job.

Q: What do you think the one biggest misperception of taxes and mystery shopping is?
Most Independent Contractors don’t think that income is reportable unless it exceeds $600 from any one company, even if you do not receive a 1099. Every penny an Independent Contractor earns must be reported, whether you receive a 1099 or not.

Q: There are many deductions that are well known to mystery shoppers, such as mileage reimbursements. What would you say the one least well known deduction/tax issue known to mystery shoppers is?
One possible deduction for many shoppers is dependent care expenses. If you pay someone to care for a minor child while you are mystery shopping, these expenses may be deductible. This includes pre-school tuition.

This is just a small snippet of information that will be provided at the tax seminars for mystery shoppers, which start this month. Thank you to Carolyn for taking the time to share this information.